Check Kitting: What You Need to Know About This Fraudulent Scheme

Definition & Meaning

Check kitting is a fraudulent practice that involves writing checks against a bank account without sufficient funds. This method is used to artificially inflate the balance of a checking account, allowing individuals to cover checks that would otherwise bounce. Typically, a check is written from one bank account, while another check is written from a different bank account that also lacks sufficient funds. The second check is intended to cover the first, creating the illusion of available funds.

Table of content

Legal Use & context

Check kitting is primarily addressed in criminal law, as it constitutes fraud. Legal professionals may encounter this term in cases involving financial crimes, banking regulations, and fraud investigations. Users may find relevant legal forms and templates on platforms like US Legal Forms to assist in navigating the complexities of such cases.

Key legal elements

Real-world examples

Here are a couple of examples of abatement:

Example 1: A person has a checking account with a balance of $100. They write a check for $500, knowing there are insufficient funds. To cover this check, they write another check from a different account that also has insufficient funds. This creates a temporary illusion of available funds.

Example 2: A business engages in check kitting by writing checks from various accounts to cover each other, leading to inflated account balances and potential financial liabilities. (hypothetical example)

State-by-state differences

Examples of state differences (not exhaustive):

State	Legal Consequences
California	Check kitting can result in felony charges and significant fines.
New York	Considered a serious crime, with potential prison time and restitution.
Texas	May lead to both civil and criminal penalties, depending on the amount involved.

This is not a complete list. State laws vary, and users should consult local rules for specific guidance.

Comparison with related terms

Term	Definition	Key Differences
Check kiting	Fraudulent practice of writing checks without sufficient funds.	Involves multiple accounts to cover insufficient funds.
Check fraud	General term for any fraudulent activity involving checks.	Can include forged checks, not limited to kiting.
Bouncing a check	When a check cannot be processed due to insufficient funds.	Bouncing does not imply intent to defraud.

Common misunderstandings

What to do if this term applies to you

If you suspect you are involved in check kiting, it's crucial to take immediate action:

Consult with a legal professional to understand your rights and options.
Gather all relevant financial documents and records.
Consider exploring legal form templates on US Legal Forms for assistance with related legal matters.
Be aware that complex situations may require professional legal help.

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Quick facts

Typical penalties: Fines, restitution, and possible imprisonment.
Jurisdiction: Varies by state; generally falls under criminal law.
Common defenses: Lack of intent to defraud or misunderstanding of account balances.